Reflections on electronic signing one year on from the outbreak of the Covid pandemic

29 August 2021

The pandemic has brought real challenges and frustrations to us all, and so much has changed in a relatively short space of time. In an effort to increase efficiencies and facilitate flexible working, this time last year, after a few months’ debate, we rolled out new e-signing software on Earl’s computer systems.  A year down the road seems to be a good time to reflect on how well this software has been employed and the changes that it has brought to our working practices.

 

Our Swiss office opted to license software from an organisation accredited by the Swiss government and capable of creating a Qualified Electronic Signature (QES) within the meaning of the Swiss law on electronic signatures (the ZertEs).  To make a segway into the technicalities for a moment, the software that we acquired permits us to create not just an electronic signature but a digital signature, which is something much more useful altogether.  To explain, whereas an electronic signature simply attaches an electronic symbol or process to an agreement (e.g. by signing on an iPad with a stylus, or copying a jpeg image of one’s signature into a document), a digital signature includes, in addition, an encrypted digital certificate, which both authenticates the identity of the signer when affixing their signature and guarantees that the document has not been altered in transit.  The validity of the document is then capable of verification using a technology known as public key infrastructure (PKI).  For the user of the e-signing software, it works in practice much like banking software, with the signatory being required to enter a unique code or utilise facial recognition on their personal mobile phone in order to sign.

 

“But why do we need such a complex software?” - I hear you ask.  “What about all the other signing software available?”   The Swiss ZertES dictates that only QES signatures are equivalent to a wet ink signature.  What seemed at first a disappointing restraint, one year on however, has proved to be somewhat of a strength.  In the course of our daily business we are required to sign investment documents issued by investment companies all over the world, the US, the UK, Europe and elsewhere.  And maintaining high standards allows us to more easily fulfil our counterparties’ requirements, as well as various divergent local laws on electronic signatures.

 

As you may be dismayed, or unsurprised to learn, across the world, one jurisdiction to the next has come up with its own, and often quite different, rules as to how and what documents may be executed electronically.  Probably the biggest sticking point is rooted in the historic divide between the common and civil legal systems, the first of which clings to its medieval concept of a deed.  Thus any deed to be signed by an individual for example must be signed “in the presence of a witness”.  And although the Law Society has tried to create guidelines for documents to be witnessed electronically, for example by the signatory and witness signing in video conference, for all intents and purposes this is – at least for the time being – quite impractical. When you see the words “EXECUTED AS A DEED”, therefore, its usually the simplest to consult with your trusted legal advisor for advice. In fact it is always good to have your legal advisor to hand whilst navigating these new waters.  But the good news is, that those documents that cannot be signed electronically tend to be the exception to the rule.

 

Overwhelmingly, we have seen all our business partners, banks, law firms, investment houses, high net worth individuals, all wishing to switch to electronic signatures, and, like Moore’s law, there is no holding that trend back.  As a trustee, we saw that we needed to move with the times, but being risk averse this could only be done after beforehand having implemented procedures for the safeguarding of data.  In some ways, therefore, electronic signing has introduced a whole new area of complexity.  On the other hand, now that the teething period is over, it is quite clear that electronic signing software generates real efficiencies, increases reactivity and is the way forward.  This is certainly one positive that has emerged out of these challenging times.

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